Switzerland not ready to hand Russian assets to Ukraine

Damage to a residential building hit by shelling in Dnipro, southeastern Ukraine, on January 14 Keystone / Dnipropetrovsk Regional Military

Confiscated Russian funds cannot be used to rebuild Ukraine without a clear legal basis for such a move, Swiss Foreign Minister Ignazio Cassis said at the World Economic Forum (WEF) in Davos.

“We are all aware that the damage caused by the aggressor should be repaired by the aggressor,” Cassis said. “But we have to act within the rules of law, otherwise we lose credibility when we condemn others for violations of the law.”

Switzerland has seized CHF7.5 billion ($8 billion) of assets from sanctioned Russian oligarchs with links to the Kremlin. But repeated demands from Ukraine to permanently take these funds and use them to pay for war damage have so far failed to gain concrete international acceptance.

This is because the frozen funds are not of an illegal origin. But Switzerland continues to work with the G7 nations, the European Union and the United Nations to find a legal solution to Ukraine’s demands.

Since the start of the war in February 2022, Switzerland has been trying to balance its neutrality with support for Ukraine over the Russian invasion. Switzerland initially declined to impose economic sanctions on Russia but changed its mind under international and domestic pressure.

The issue of using seized Russian funds to pay for war damage is being addressed by many countries but is proving a complicated legal challenge.

Ukraine Recovery Conference

Cassis’s comments were made on Wednesday as Switzerland handed over leadership of the Ukraine Recovery Conference to Britain this year. The first edition of the conference was hosted in the Swiss city of Lugano in July.

Speaking over video link, Ukrainian Prime Minister Denys Shmyhal said the second meeting in London in June should define the extent of international funding to repair up to $700 billion of destroyed infrastructure.

Shmyhal emphasised that confiscated Russian funds should be part of this package. “The aggressor must compensate Ukraine for the damage it has caused,” he said.

The most urgent need is to repair Ukraine’s electricity grid that has been reduced to 50% output by repeated Russian drone attacks.

Shmyhal also noted that transport and logistics infrastructure needs rebuilding along with factories and the homes of seven million Ukrainians who have been internally displaced.

‘Right thing to do’

Cassis added that the need to constantly repair wartime damage vindicated the decision last year to transform the Ukraine Reform Conference into an international forum to help Ukraine recover from the war.

“The reaction at the time among the Swiss population and the media was: ‘What, are you crazy? How can you think about recovery at the very start of a war?’” he said.

“We knew it was a bet, but Ukraine and Switzerland were committed to meeting this challenge. It was the right thing to do. Reconstruction is keeping the country alive.”